The topic of this week is the IBI tax. Very often we receive a lot of questions from clients who do not understand what the IBI means and where and how to pay it. So, for those who might still be unaware about the existence of this local rate, we hope you will find this information useful.

First of all, the IBI is a local rate payable to the local authorities by ALL residents and Non resident people (irrespective of their nationality), as a consequence of owning any kind of property in Spain, (dwelling, garage, rustic or urban dwelling, plot of land, etc). Therefore, it does not matter if you are Spanish or English or you use the dwelling as a second residence only. You will still be liable to pay it!

In the “Valencian Region”, the office in charge of managing the payment of the IBI is called the “SUMA OFFICE”.So, remember, every time you might receive a letter from SUMA, in 90% of occasions, it will be unfortunately bad news for you.

Second, the payment is due annually and it is highly advisable that you to instruct your bank to set up a direct debit, so the charge will be made automatically around September-October each year directly into your bank account. This will allow you to obtain a little “bonus” for setting up the payment by standing order.

Third, if you are planning to buy a property, do not forget to ask the seller for a copy of the latest 2 or 3 IBI receipts duly paid. Moreover, be extra cautious if the property you intend to buy is “rustic” (a country house for example), as the lack of IBI receipt will reveal a legality problem. Sometimes, you will notice that the property is paying a very little tax, simply because it was registered only as a plot of land or perhaps due to the fact that it was registered long time ago but as a “warehouse” instead of a dwelling! In situations like this, before signing the Title Deed at the Notary, you must always demand the seller to correct this situation by updating the receipts at their own expense.

Finally, please find above an example of a standard IBI receipt together with some useful tips that will help you understand how this rate is calculated:

1.- “ VALOR CATASTRAL”: The cadastral value of the property is the rateable value of the property, which may bear little resemblance to what you believe the property to be worth, or what you actually paid for it. The Valor Catastral is usually around 50% to 70% of its market value.

2.”ULTIMA REVISION”: Due to the fact that the market value of properties can change over time, local authorities will periodically update the cadastral value assigned to each property. You will be able to identify when this happens from your last receipt where you will find it displayed. However, in practice, this figure can be legally reviewed by bankrupt local authorities, with the sole purpose of collecting money, irrespective of the actual market value of the property.

In other words, almost every year, the IBI rate will most likely increase, even if the market price of properties might have gone down. For example, in cities, like Madrid, studies have revealed that property owners have seen huge increases as the IBI has been increased in more than 54% in the last 5 years! Absolutely disgraceful!

3. “ TIPO IMPOSITIVO”: Once the ‘Valor Catastral’ has been decided, a different percentage will be applied depending on a number of factors: Rural or Urbanised land, Type of Property, Square meter of Land and Build, Proximity to services, Infrastructure etc, etc. Each Town Hall will place a slightly different importance on each factor or criteria mentioned.

4. “BONIFICACIONES”: Finally, “bonifications” will be taken into account in order to calculate the final quote. The most frequent one is setting standing order, as indicated earlier.
To sum up, if you suspect that your bill is too excessive and if you disagree with the assigned value, the first thing that you should do is check all the papers that you hold regarding your property (title deed, previous IBI receipts, etc).

We have encountered a few situations where the SUMA office did actually make several mistakes, especially with regards to old rustic country houses. Therefore, do not ever take for granted that the value given by the town hall or the SUMA office is the correct one! Under these circumstances you should contact us urgently for advice and we will be delighted to advice you about the most effective way to request for a revaluation aimed to rectify the error.

Therefore, should you ever need a reliable, 100% independent, honest, cost effective and efficient English speaking Spanish solicitor, to help you with your property conveyance or taxation matters, (or with any other legal problem), make sure you bookmark this page, visit our websites: www.ricorabogados.com and www.englishsolicitorinspain.com or alternatively, please do not hesitate to contact us by e-mail at ricorsolicitors@yahoo.co.uk